Hotels and Restaurants Industry in India

F o r m o r e i n f o o n B u s i n e s s s e t u p v i s i t w w w . s t a r t b i z i n d i a . i n P a g e | 1 For Business setup queries email at [email protected] or call at 011 40622249

Insight

Biz India News

2

Biz Policy Updates

3

The Indian Hotel & Restaurant Industry

4

Business Idea of the Month

9

StartBizIndia Discussion Platform

10

Upcoming Business Summit

11

Contact us

12

eBizWire

Vol. I Issue. X, November 2012

Industry of the Month “The Hotels &

Restaurants Industry

http://www.startbizindia.in/�

mailto:[email protected]�

F o r m o r e i n f o o n B u s i n e s s s e t u p v i s i t w w w . s t a r t b i z i n d i a . i n

P a g e | 2 For Business setup queries email at [email protected] or call at 011 40622249

India shall be the 2nd largest Manufacturing country

Private Equity Investments in India go up in the 3rd Quarter

India ranked 4th on the Renewable Energy market Potential by E& Y

India and Spain sign MOU on technical cooperation in field of road and railway transport

Indian Energy firms shine in Platt’s top 250 Global rankings

India’s KWAN Entertainment forms a Joint Venture with LA based Creative Artists

• The consultancy firm Deloitte Touché Tohmatsu has said that in the next five years, India is expected to be the second largest country on the manufacturing front. China will maintain the number one positions and Brazil will occupy the third position after India. Deloitte has said that what will keep these countries at these positions is the competitiveness of each of these country’s manufacturing innovation ecosystem,

• The quarterly PE investments have increased 4% in value in Q3. IT and IT enabled services sector remained the top player with the highest contribution from the Private Equity firms, both in value and in volume. It is hoped that opening of the multi-brand retail sector is going to fetch more PE investments to India.

• Ranked 2nd on the Solar Index and 3rd on the Wind index, India has been given an overall rank of 4 in renewable energy market attractiveness. The share of renewable energy in the Country’s total energy contribution has gone up by a little over 4% from 2008 to 2012. Investments in India in the clean energy sector have grown by almost 57% every year which is the highest growth rate in the sector across all economies.

• An MOU has been signed between the 2 countries, which is aimed

to promote efficient and environmentally sustainable transport systems. The Government officials and specialists of the relevant departments of India and Spain will constantly exchange to enhance cooperation and exchange information in areas of road transport, highways, high speed railways, safety in train operations, power supply systems and similar matters.

• 12 Indian Companies have made it to the top 250 rankings and 6

even rank high among the Top 50 Companies. Cairn India has been named as the fastest growing Company not only in Asia but the whole World. Out of all the Indian Companies, Power Grid Corp improved its overall ranking from 232 in 2010 to 172 in 2011.

• KWAN Entertainment and Marketing Solutions has entered into the

Los Angeles based sports & entertainment firm which will represent talent from India and other SAARC nations. The JV Company which will called CAA KWAN will be based in Mumbai and provide services in areas like motion pictures and television, music, commercial endorsements, sports consulting, etc.

Biz India News Headlines Headlines





Biz Policy Updates

Facilities for Persons Resident outside India- FIIs

Facilities for Persons Resident outside India – FIIs

Till now only designated branches of AD category I banks maintaining accounts of FIIs were allowed to act as market makers to FIIs. The banks are responsible for hedging the currency risk of FIIs on the market value of their entire investment in equity and/or debt in India as on a particular date.

From now on, the FIIs can approach any AD Category I bank for the purpose if hedging this risk BUT the eligibility for the same will be decided by that bank on the basis of a valuation certificate as provided by the designated AD category bank. Apart from that the FII will have to give a declaration that its global outstanding hedges plus the derivatives contracts cancelled across all AD category banks is within the market value of its investments. The FII will also have to give a quarterly declaration as to the fact that the total amount of derivatives contract booked across AD Category banks are within the market value of its investments.

It has been clarified that hedges with AD banks other than the designated AD banks will have to be settled through the Special Non Resident Rupee Account only.

Legal Headlines





India is known as the land of snake charmers to some, as land of religious diversity to some others and as land of Bollywood to entertainment lovers. Whether it’s the food, the diversity in cultures, handicrafts or business opportunities, everybody seems to have some or the other reason to travel to India. And the fact that the World Travel and Tourism Council considers India to be one of the top most tourist spot with the highest ten year growth potential (2009-18) [ www.wttc.org ], we have a reason to believe that India is only going to see more visitors.

It is said that the Indian tourism brings a substantial share to the country’s foreign exchange earnings and if you closely examine it, most of that comes from the hospitality business in India. The revenue from the hospitality sector in India broadly comes from two sources:

1. Hotels: Which include lodging, attending business conferences and meetings

2. Restaurants: Which includes all sort of eateries whether fine dining restaurants, quick service restaurants, takeaways or other forms of eating joints.

Hotels and Restaurants after all are the prerequisites for any visitor, local or foreign. And focusing on the last bit, it’s hard to not miss out on the fact that not only the foreign visitors, but Indian visitors travelling across states and cities bring in a huge chunk of revenue for the country’s Hotel and Restaurant Industry. Therefore it can be said that the Tourism and the Hotel and Restaurant Sectors go hand in hand. Or rather, it can be said that the latter forms a prominent and an important part of the former.

The market comprising of the foreign tourists is huge and is only growing year after year. The Foreign Tourist Arrivals standing at a figure of 4.15 Lakh in September 2012, registered a growth of a little over 3 percent compared to the corresponding month in the previous year. To prove the huge amount of foreign exchange that is added to the country’s reserves is the fact that the Foreign Exchange Earnings during September 2012 were almost Rs. 6,650 Crores! [ www.ibef.org ].

The rise in incomes coupled with fascination to travel to a new country is a considerable reason to believe the growth of foreign visitors to India. Similar reasons can be attributed to upsurge in the domestic visitors too. India is believed to be a country with the fastest growing middle class, and applying the general principles of economics with respect to availability of leisure time and disposable income, travelling is now a necessity for many. Visiting the dear ones, exploring your own country, taking a break from work, searching for business opportunities, there are reasons galore for Indian citizens to look to travelling. Thanks to this upsurge, the hotel rates in India increased by almost 12 percent in the first half year in 2012! [ www.ibef.org ]

Hotels and Restaurants Industry: A source for bread for many

It is clear that the Tourism and the hospitality industry are highly inter-related but not only that, the hospitality or the Hotels and Restaurants sector is substantially linked with other industries in the economy like

India ranked 5th in the World for hotels with the best business outlook (A report by Trip Advisor)

Hotels & Restaurants Industry in India



http://www.wttc.org/�

http://www.ibef.org/�

http://www.ibef.org/�




agriculture, transportation and construction which can be easily reasoned.

To add to that the sector creates the maximum number of jobs than any other industry in the economy. After all it has place for all kinds of people, no matter how unskilled or specialized, which can be easily sampled in any hotel or a restaurant.

Typically a hospitality unit such as a Hotel or a Restaurant consists of various departments which work in close tandem to provide the combine service a customer enjoys. There is facility maintenance and direct operations which includes bartenders, kitchen workers, servers, housekeepers, porters, etc. Apart from that there is the obvious and more prominent Human Resources department, people taking care of the marketing and the management.

Not only this, the employment generation potential has not gone unnoticed. The World Travel and Tourism Council says that India’s Travel and Tourism sector is soon going to be the second largest employer in the World. It will be employing more than 40 lakh persons by 2019. [www.invest-india.com]

What’s enhancing the business lately?

The tourism can be divided into various categories depending on the purpose of the visiting tourists. We have all known adventure tourism, heritage tourism, rural tourism and pilgrimage tourism; the heritage tourism being the most important driving factor in the Indian tourism sector because of the country’s rich heritage and ancient culture that is known Worldwide.

But what is catching up more lately is the medical tourism. It is said that medical tourism is a sunrise sector in India because of a large number of foreign visitors coming to India for medical purposes. With good quality medical services at rates cheaper than those in other countries, India seems to have become one of the most preferred medical tourist destinations. Not only this, domestic tourists also avail these facilities especially if they can afford the super specialty hospitals which are known for guaranteed treatment in most cases. That’s the reason you see so many guest houses and B&B facilities (Bed & Breakfast) around hospitals these days. According to a RNCOS report titled ‘Booming Medical Tourism in India’, it is expected that the country will experience a Compound Annual Growth Rate of 27% during 2011-2015 in this sector.

Another form is the wellness tourism which is more or less a subset of the medical tourism. Since India is known for Ayurveda, Yoga, Naturopathy and spiritual philosophy, our country is one of the most sought after wellness destinations which attracts tourists from world over and from around the country to various Ashrams and centers which have been established to promote the natural way of health and healing.

Also, with the India Inc. brimming with opportunities, a trend which was well existing before has become stronger. It is the MICE tourism, which is basically an abbreviation for Meetings, Incentives, Conferences and Exhibitions, that is the fastest growing concept in the industry.

Various types of tourisms boosting Indian Hospitality’s Growth:

Heritage Tourism

Medical Tourism

Wellness Tourism

MICE Tourism

India ranked highest among various countries based on increased staff levels (www.ibef.org)



http://www.invest-india.com/�



Halls in hotels are almost perpetually booked by companies for such events and this brings in the business travelers. Some top hotels cater to these needs thus facilitating conduct of domestic as well as international business meets.

Approval of Hotels

The nodal authority for regulation of Hotels is the Hotel & Restaurant Approval & Classification Committee which is a division of the Ministry of Tourism. It approves the projects on a 5 yearly basis. Once the hotel becomes operational, an application for classification has to be made whether or not all the rooms have been completed or not which again is valid for 5 years.

Apart from the necessary prescribed documents, the following local approvals are required from:

• Municipal Authorities • Concerned Police Authorities • Airport (for projects located near Airports) • Municipal Health Officer • Fire Service Department • Bar License

The approvals shall depend on the classification of the Hotels in “Star Category” or “Heritage Category”

Necessary Licenses for a Restaurant

A restaurant apart from requiring a license under the respective state’s Shop and Establishment Act will require the following licenses among others:

• Food Safety License from FSSAI (Food Safety & Standards Authority of India)

• Health License from the Health Department of the Municipal Corporation

• Eating House License from the Police Commissioner • Liquor License from the Excise Commissioner • License for playing music from the Phonographic Performance

Limited • NOC from the Fire Department

Some Important Associations you can be a part of if you operate in the Industry:

1. Federation of Hotels and Restaurants Associations of India: (www.fhrai.com) The 3rd largest Hotel & Restaurant Association in the world, FHRAI is the apex body of four regional associations representing the Indian hospitality industry. Aiming to promote and protect the interests of the Hospitality industry, FHRAI keeps its members well


STAR CATEGORY

HERITAGE CATEGORY

• 5 Star – Deluxe

• 5 Star • 4 Star • 3 Star • 2 Star • 1 Star

• Heritage Grand

• Heritage Classic

• Heritage Basic



http://www.fhrai.com/�



informed about latest trade information and trends, statistics and other studies.

2. Hotel Association of India: (www.hotelassociationofindia.com)

The Association aims at projecting the industry’s role as a contributor to increasing employment opportunities and sustainable economic and social development. It’s objective is to raise the standards of hoteliering and build an image for the industry both outside and within the economy.

3. National Restaurant Association of India: (www.nrai.org ) The NRAI is the leading association for stand alone and chain restaurants and offers individual and corporate memberships to them. Having a pan India presence with over 1000 members, it aims at representing, educating and promoting the independent restaurant owners and operators.

4. International Hotel and Restaurant Association: (www.ih-ra.com)

This International organization monitors issues that are raised by major international organizations involved in tourism and lobbies for better recognition of the hospitality members Worldwide. The membership is not only open to the National Associations for Hotels and Restaurants in various economies but individual restaurants and hotels as well.

Foreign Direct Investment:

The Indian Government allows FDI up to 100% under the automatic approval route in the Hotels Industry. The investment is available for construction and development including that of hotels and resorts, recreational facilities and infrastructure. For this purpose the term hotels includes restaurants, beach resorts and other tourist complexes providing accommodation and/or catering and food facilities to tourists. Not only this, a 5 year tax holiday is available for organizations which set up resorts, convention centres or hotels at specific destinations.

Major names in the industry:

Several players, national and international have established a strong foothold on the Indian platform for Hotels and Restaurants. International names like Accor, Amanda, InterContinental, Hilton, Marriot, Starwood, Satinwoods and the similar continue to woo the customers whether Indian or visitors to India. But on the other hand, Indian Companies in the industry are equally well established and in many a case doing better than their international counterparts. The Indian Hotels Company, East India Hotels, ITC, Leela, Asian Hotels have all kept the visitors in awe. Where the restaurants are concerned, the Indian brands and stand alone restaurants co-exist in harmony with international food chains like Domino’s, McDonalds, Pizza Hut, KFC, Costa Coffee and now Starbucks also.




http://www.hotelassociationofindia.com/�

http://www.nrai.org/�

http://www.ih-ra.com/�



Important Developments that are hoped to boost the industry:

• The Indian Company ITC launched its hotel “Great Chola” in Chennai with an investment of over Rs. 1,200 Crores which is touted to be the World’s largest LEED Platinum Green Hotel.

• The KEF Company plans to set up a luxury hotel and a super specialty hospital in Kerala with an investment of Rs. 1,600 Crores approximately.

• Bengaluru based Hyagreev Hotels have entered into a JV with the Japanese Toyota Enterprises.

• FHRAI has signed four memorandums of understanding with its counterparts operating in USA, Europe, Middle East, United Kingdom and China to exchange expert solutions regarding the industry.

• USA based Wyndham Hotels will increase its properties in India to 70 in number by 2016.

Government’s Initiatives which will have a direct impact on the Hotels and Restaurants Industry

• The Maharashtra Government will set up an international cruise terminal at the Mumbai port which is expected to bring the European and the American tourists to India.

• The Gujarat State Government is whole heartedly trying to boost tourism in the State and has allocated Rs. 400 Crores for the purpose. The Planning Commission has also approved a grant of Rs. 1,200 Crores to promote coastal tourism in Gujarat.

• The Incredible India Campaign started by The Ministry of Tourism which is already playing a huge role in development of the industry is hoped to continue bringing more tourists to India because of the way it promotes the Indian culture that leaves a lasting impression on the minds of people. Other campaigns started by the Government like the “Colours of India” and “Atithi Devo Bhava” are also doing well.

• The Central Government allows the visa on arrival for tourists from Countries like Finland, Luxembourg, New Zealand, Japan and Singapore which removes unnecessary hassles for these tourists in terms of obtaining a visa.

• The Government has introduced a new category of visa altogether, called the ‘Medical Visa’ or simply M-visa to promote medical tourism

Given the enthusiasm of top players in the Industry, of the Government to promote the industry and of the tourists to visit India is proof enough of the bright future this Industry has. Setting up a new Hotel might be a herculean task requiring a lot of investment but starting a restaurant offers huge earning potential even for those who want to start small.






Business Idea of the Month

Mobile Food Van

Mobility has become part and parcel of the high paced lives people lead today, especially so in the metros. Competition you call it or the most modern manifestation of the famous Charles Darwin’s theory of Survival of the Fittest, everybody is working very hard to the extent of being available 24x7. And this makes it ever important for people to indulge in activities that rejuvenate their sense, good food being one of them.

West has this popular culture of food trucks which are nothing but mobile catering vans which move around in localities (very much like the ice cream carts here) selling anything from fast food to gourmet food served by amateur chefs. Such vans are very popular among people for various reasons: one, because of the convenience of locality; second, because of their lower prices in comparison to proper restaurants and third, the quickness of their service.

India has a similar concept bur more or less with the vans stationery at a place and that too is more common in industrial areas. For someone who likes to cook and feed people as a hobby, this is the best work idea where you not only get to fulfill your interest but get to earn as well.

One thing to consider here is that the initial investment in a van which can accommodate your cooking appliances depending on your preferences and the type of food you wish to sell. How you can differentiate your food van from others is by giving your van a proper look, having uniforms for all the staff that you plan to have, giving attention to the appearance of food you serve, emphasizing on hygiene and using social media to connect to the people. You can also give a new dimension to your business by accepting contracts for catering and getting booked for private events

Among other formalities before starting a business, you will have to consider the license and registration as per the Food Safety and Standards (Licensing and Registration of Businesses) Regulations 2011 and also seek permission from the Traffic Police in case you want your mobile food van to be mobile in the truest sense of the word.

Do not forget to refer to the Food

Safety and Standards

(Licensing and Registration of

Businesses) Regulations 2011





dfca

6 years back Mrs. Sushila Kumar who lives in the North Campus of Delhi University started a Tiffin facility for several students residing in the area. The business has now slowly and steadily flourished and the number of students the food is supplied to has increased from 25 to 300. With the introduction the Food Safety and Standards Regulations, 2011 by FSSAI, Mrs. Sushila wants to know what measures she should take in order to be compliant.

All the existing food businesses need to comply with the Regulations by 4th February 2013 and in order to do that, the follow steps must be followed:

1. Food Safety Audit Any business planning to apply for license must get a gap audit conducted wherein the gaps existing in its Standard Operating Procedures (SOP) are located by measuring them against the standards set by the regulations. The audit would be conducted by the authority’s own officer.

2. Testing Any FBO manufacturing, selling, serving, handling, distributing and importing food needs to assess whether the raw materials are chemically and microbiologically safe for the human consumption. This testing can be done either by an in-house lab or by a NABL accredited or FSSAI notified lab.

3. Training Any person handling, storing, manufacturing, serving, selling, distributing or transporting food needs to be trained about the new regulations

4. Proper Documentation All the documents as required under the regulations need to be maintained in a proper format as it will be the only safeguard in any court of law.

5. Application for License To be legally authorized to continue the business, every Food Business Operator will be required to apply for a license under these regulations based on the turnover specifications given under the Food Safety & Standards (Licensing and Registration of Food Businesses) Regulations, 2011.

StartBizIndia Discussion Platform





Business Opportunities Show, 2012

A forum focused on franchise opportunities and development, it has had coverage of almost 31 cities in India since its inception in 2003. Keep your planner free if you are a franchisor interested in expanding your business regionally or a franchisee who’s looking for better opportunities. Date and Venue: 1st December: Hotel Surya Palace, Vadodra 3rd December: Hotel Grand Regency, Rajkot 4th December: Hotel St. Laurn Towers, Ahmedabad

Small Business Congress, 2012 A conference that will unveil various business opportunities for small businesses, it is aimed at exploring environment for creating new business ideas, funding, team building and competition. Attend this conference if you want to expand your connections, land up angel investments for your ideas or expose others to your business. Date: 17-18th December Venue: The Lalit, Mumbai INTERNATIONAL EVENT

Tie Con Australia 2012 The conference aims to bring together people and discuss how there’s nothing wrong with starting a business when you are 40 and how a business is more likely successful if formed with a meaningful higher purpose and an ethical and generous mindset. Date: 3rd December Venue: Park, Hyatt Hotel, 1 Parliament Place, East Melbourne

The Business Opportunities Show, 2012

The Small Business

Congress, 2012

Tie Con Australia, 2012

Upcoming Business Summit





Disclaimer: This paper is a copyright of Corporate Professionals (India) Private Limited. The entire content of this paper have been developed for the new startups. The author and the Company expressly disclaim all and any liability to any person who has read this paper, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this paper.

Nitesh Latwal

E: [email protected]

D: +91.11.40622249 M: +91 9873521481

Visit us at

A Venture of

D- 38, 1st Floor, South Extension, Part I

New Delhi – 110049

T: +91.11.40622200 F: +91.11.40622201


Ritika Kharbanda


D: +91.11.40622246 M: +91 9899180593

Biz India News



Investor Relations

Hotels and Restaurants Industry in India